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The Canadian Imperial Bank of Commerce has agreed to pay $10 million to settle a case over how the lender charges depositors who attempt to make payments without sufficient funds in their accounts.
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The proposed settlement of the ongoing class action was announced on Thursday by both CIBC and Toronto-based law firm Koskie Minsky LLP. A hearing to approve the agreement is expected to take place on Oct. 19.
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If the settlement is approved, CIBC will deposit the funds directly into the bank accounts of eligible class members. While the bank has agreed to pay, it “has not admitted liability and denies liability,” the statement on Thursday said.
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Similar settlements have been reached with Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia in the past. Scotiabank agreed to pay $10.45 million in March, RBC agreed to pay $7.05 million in 2025, while TD agreed to pay $15.9 million in 2023.
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The allegation against CIBC is that the bank charged multiple NSF (Non-Sufficient Fees) on a single rejected payment or bounced cheque, according to a court document filed in 2022, which is when the legal proceedings began against the bank.
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The charge occurs when a depositor makes a payment or issues a cheque without sufficient funds in the bank account. The “first and only lawful charge is applied when the payee attempts to collect and CIBC rejects the payment,” it said.
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“However, when subsequent attempts are made by the payee to process the same, already rejected payment or cheque, CIBC charges a duplicative NSF fee each time,” the document said. “The burden of these duplicative NSF fees falls disproportionately on low-income Canadians, who are more likely to maintain low bank account balances.”
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The class action took issue with these kinds of charges that took place between Sept. 21, 2020 and May 31, 2024, the statement on Thursday said. The class action was certified by the Ontario Superior Court of Justice on June 3, 2024.
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In March the Government of Canada announced a $10 cap on NFS fees down from as high as $50.
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“With over one out of three Canadians incurring an NSF fee annually, this measure addresses a significant financial burden that disproportionately affects those living paycheque to paycheque,” the government said in a statement on March 12.
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It also said that consumers will not be charged an NSF fee more than once within a period of two business days for the same deposit account. In addition, no NSF fee may be charged when the overdraft amount on the account is less than $10.
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The cap is expected to save Canadians more than $600 million, the federal government said.
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